Bringing business to the boil

Bringing business to the boil

Entrepreneurs require a combination of investment, nurture and rock-solid advice. Deloitte's Jim Boyle tells BQ that vital experience in the heat of a deal is worth its weight in gold.

Jim Boyle admits he’s been a lucky guy in business. He has had a ringside seat at some of the most important business transactions involving Scottish firms over the past 20 years. And, despite the temporary trauma of being one of the refugees when Arthur Andersen collapsed after the Enron scandal, he’s had a very interesting career for someone still under 40. Glasgow-born Boyle studied accountancy and economics at Strathclyde University, qualified as an accountant and then joined high-flying Arthur Andersen before the lights went out.

It is interesting to remember that the accounting giant was broken up in 2002 after being found guilty of obstructing the course of justice in the United States – a conviction subsequently quashed by the US Supreme Court in 2005. He then segued across to former rivals Deloitte & Touche with a range of other Andersen’s confederates who morphed easily into the new culture. But it was an early period as an Andersen’s auditor that threw fresh-faced Boyle in at the deep end.

“Throughout most of the 1990s I was exceptionally lucky in that my main audit clients were Stagecoach, Kwik-Fit, Johnston Press and DX Communications,” he recalls. He worked on Stagecoach’s flotations and their early acquisitions including Kenya and Malawi; the purchase of Porterbrook, the rail leasing business, and Stagecoach’s expansion into the North-East of America with Coach USA. At Kwik-Fit he was involved when it was bought out by Ford, while at Johnston Press, he worked when Freddie Johnston was handing over the reins as the Edinburgh based company continued to expand its UK local newspaper empire.

On top of this, he was there when Richard Emanuel and Chris Gorman sold DX Communications to BT Cellnet for £42m. “I probably didn’t realise it at the time but I was totally spoiled by working alongside some of the country’s most pre-eminent entrepreneurs,” says Boyle. “These were ambitious, growing Scottish companies. I was a wee laddie in my early twenties having a chat in the corridor with Tom Farmer and sitting at meetings in London with Brian Souter. You can’t help but learn from that kind of experience.” Jim believes that sitting in the white heat of this kind of business crucible, and watching how deals are carved out, is vital inside knowledge that can be passed on to aspirational businesses.

But along with the high octane, there are more “mundane” activities that are equally essential. “Being an auditor is a great way of getting under the bonnet of a business and understanding what the key issues around the boardroom are in terms of strategy,” he says.

“The type of work has changed dramatically and it is not about blindly going away and ticking boxes. It is about understanding what the big management decisions are in any given company.” So what did a Glaswegian auditor recognise as the attributes of the successful business people he was shadowing? He says: “I could see they all had focus and commitment. At Stagecoach, it was absolute attention to detail and having the eye on the ball all the time.

Brian Souter is exceptionally shrewd and very much into the detail. He will know which of the bus or train routes are performing and which require his management’s close attention.” Jim Boyle agrees that Stagecoach experienced turbulence when it moved into buying up mom-‘n’-pop American bus companies, and says this might have been a case of stretching too fast or too far, and the prevailing market conditions.

This was also a time when the bold Mr Souter stepped back for a while before returning to the helm. Boyle says the successful return shows the exceptional stature of the Perth-based transport entrepreneur. Was it a time of milk and honey and easy-toget money? “Availability of finance was not exactly unlimited, but it was certainly a different era from now,” he says.

“It was easy to be seduced by acquisitions when the money was on the table. Maybe, with hindsight, everyone realises that perhaps many businesses had become over-leveraged.” For two and half years, Jim Boyle has been head of Deloitte’s Entrepreneurial Business Team in Scotland.

“Today, there’s nothing I enjoy more than meeting growing businesses and getting on board with them,” he says. “It’s a real learning curve for both of us.” He has a number of current entrepreneurial clients, including 3D Diagnostic Imaging, which announced its initial public offering on AIM, raising £2.7m – and is a spinout from Dundee University – and Clintec International, founded and headed by Dr Rabinder Buttar, one of Scotland’s most successful businesswomen and a finalist in the Ernst & Young Entrepreneur of the Year awards in 2009. Dr Buttar, a Strathclyde University graduate, brought the business over from Germany and has been building the Finnieston-based company into an international clinical research business.

It recently sold a stake to a major Indian company. Boyle has also been looking after more traditional retail companies, such as Scotmid, which is leveraging the co-operative and mutual model to take on the big supermarket chains. “A lot of businesses are now starting to do things,” he says.

“For 18 months we had nothing but negative news and few transactions, and these were often distressed transactions at the bank’s behest. We’re now seeing more of our clients looking at acquisitions, expansion and store openings.” “One of the big roles we have is with the Entrepreneurial Exchange, where we are a corporate member.

We are the award sponsor, doing most of the legwork and analysis for the annual Entrepreneur of the Year programme (the winners are in the new section of this BQ). “In the first instance, we do an independent assessment on behalf of the Exchange, looking at the growth story. Then there are the key questions; what is the company’s USP, where are the markets, how well do you know your competitors, and how are you incentivising and retaining key staff, what’s your succession and exit plan. And, being accountants of course, what does the cash flow look like and how’s the relationship with your bank?” For Boyle, this has created new relationships, but it begs another question. Aren’t Scotland’s young companies reticent to pay top dollar for a Big Four advisory service when there are a myriad of small accountancy businesses across Scotland providing excellent services for emerging customers? “In the last year we have taken on five or six new clients from mid-tier firms virtually with no differential on price,” says Boyle.

“There is a misconception out there that a Big Four adviser is more costly. Yes, if it’s a two-partner tiny accountancy firm, but there are different levels of expertise and advice required.

“What you should be getting from a larger organisation is access to a wider skills set of advisers and a broader industry mix.” He says that a lot of Scottish businesses look at commercial advisers as a price-based commodity and they are not looking for the value that can be added by this wider experience. He feels entrepreneurs could be missing out on the knowledge or even the market intelligence that could make a sea-change for the firm. Although Scotland requires a clutch of high growth companies that can feed off the accumulated knowledge of advisers such as Jim Boyle, he remains heartened by Scotland’s buoyant entrepreneurial sector.

He says: “My team thoroughly enjoyed meeting this year’s candidates for the Entrepreneur of the Year Awards and I personally enjoyed interviewing the six finalists as well as a number of the other candidates.

“After a few years when caution was the buzzword for many, it’s fantastic to hear so many tales of branch openings, strategic acquisitions, significant capital investment, fund-raising, new product launches, overseas expansion and growing headcount. All in all, a real cause for optimism.“ That’s the judge’s verdict, so let’s hope Scotland sees many more emerging businesses in 2011.